Fuel Companies Apply for Alaska LNG Project

By Mark Edward Nero

Alaska LNG, a partnership of oil and gas companies ExxonMobil, ConocoPhillips and BP, applied to the US Department of Energy on July 18 for permission to export liquefied natural gas for 30 years from a $45 billion to $65 billion development that includes a pipeline across Alaska and an LNG plant in the Nikiski area.

The 212-page filing seeks permission to export up to 20 million metric tons a year of LNG, the equivalent of about 2.5 billion cubic feet a day of natural gas.

The project would be the largest integrated gas/LNG project of its kind ever designed and constructed, the application states.

The three oil and gas producers are working with the state of Alaska and pipeline company TransCanada to develop the Alaska LNG export project. The development team has started preliminary front-end engineering and design work, with a decision anticipated late next year whether to proceed to full engineering, design and permitting.

In the application, Alaska LNG asks that the export authorization’s 30-year clock start with the date of the LNG plant’s first shipment, or 12 years from the date permission is granted, whichever comes first.

The application asks for two levels of export permission. The first involves exports to any of the 18 countries with which the United States has free-trade agreements covering natural gas. Under federal law, such permission is automatically and quickly given because the trade is considered to be in the national interest.

The second level of permission seeks authority to export to non-free-trade countries, which include such big customers as Japan and China.

Much stricter laws apply to exports to these countries; in such cases, the Energy Department opens a proceeding to consider whether the exports would be in the national interest.

Preferred Site Chosen for Alaska LNG Project

 The Kenai Peninsula town of Nikiski, the largest cape on the southern coast of Alaska, has been selected by Exxon Mobil, BP, ConocoPhillips and TransCanada Corp. as the leading contender for the terminal site where gas would be liquefied and shipped to Asia, the companies announced Oct. 7.

The site was chosen after 20 locations were analyzed regarding the environmental and socio-economic impact of the project, as well as cost and related technical issues.

The pipeline, which could cost $45 billion to more than $65 billion to build, would span 800 miles from the North Slope to south-central Alaska. The companies haven’t yet committed to build, however, and have been seeking favorable terms on oil and gas taxes and royalties.

“The work that we have put into the site selection process gives us confidence that the Nikiski site is the lead location for the LNG plant and terminal,” senior project manager Steve Butt said. “The Nikiski site also results in a pipeline route that provides an access opportunity to North Slope natural gas by the major population centers in Fairbanks, Mat-Su Valley, Anchorage and the Kenai Peninsula.”

Nikiski, a town of about 4,600 people, is located 10 miles north of the city of Kenai. A liquefied natural gas plant operated in Nikiski for decades and provided exports to Japan. But ConocoPhillips and its then-partner, Marathon Oil Corp., announced in 2011 that the plant would be closed, citing market changes.